This way for socialist utopia

In the spirit of the summer holidays, this month my offering is a book review.

For which I thank my good friend Raymond Ashton for handing me his copy of Thomas Piketty’s latest book, A Brief History Of Equality, last week, suggesting a review would make for an interesting article.

We shall see, eh?

I did a book review once before in these pages. Some nine years ago. A review of a book by the same author in fact. Piketty’s first polemic, Capital In The 21st Century.

To recap, for those of you who aren’t avid readers of 800-page economic texts in their holidays, which I’m guessing is most of you, Piketty was for a moment in time considered to be a ‘rock star’ economist. When he published Capital (as I shall refer to it) in 2014, he did book signings, TV interviews, a lecture tour of the US, the works.

The dust jacket of this latest work humbly suggests he is ‘the most talked-about economist on the planet’.

It’s not all hubris, Piketty has indeed become on many levels the dominant economic thinker in western fiscal policy development. Much of the work of the European Union’s Tax Directorate is motivated by the Piketty world view, but it’s the US where he’s had perhaps the most immediate impact. His influence can be seen in Democratic party policy which toys with the introduction of wealth taxes and has led to the US signing up to global minimum corporate tax rates. Quite unthinkable just a few years ago.

When I ‘reviewed’ Capital back in 2014 I hadn’t yet read it. But that didn’t stop me from presciently predicting its impact would be to drive greater political and public pressure on the offshore finance sector.

Offshore didn’t play much of a part in the original book (clearly, I subsequently read it), but it has a starring role in the ensuing narrative. Offshore, according to Piketty and his acolytes, is central to widening inequality.

In public talks, I use the Capital documentary trailer to drive home the point just how deep and entrenched this antagonistic world view of offshore has become. Gillian Tett, soon to be provost of King’s College, Cambridge, and US editor of the Financial Times, plays a starring role.

Oh, and the main premise of Capital? That capitalism by its nature creates inequality. But due to public policy intervention, inequality in the developed western world has fallen significantly over the last 200 years.

So after that little refresher, now to turn to A Brief History Of Equality.

A tiddler at just 250 pages.

And yes, I have read it.

The main premise of this one? That the western world’s gotten more equal over the last few hundred years, but there’s more work to be do. Spoiler alert. There is a global socialist utopia out there for us all to enjoy.

Setting aside the cynicism for a moment, the foundation of Piketty’s argument is sound. Our present institutional and economic regime is just a construct of social, political, cultural factors. These have changed throughout history. History is continuous. Social, political, cultural, and economic factors will change.

Ergo institutional and economic regimes can change. If you accept that premise, ie that Francis Fukuyama was wrong to call the end of history, there is a world future to play for.

Piketty’s pitch is that global socialism is that future.

That might have appealed to 14-year-old me, but 54-year-old me is less enthusiastic.

I don’t jest about it being a pitch for global socialism, or in Piketty’s own words, a ‘democratic and federal socialism, decentralised and participatory, ecological and multicultural, based on the extension of the welfare state and progressive taxation, power sharing in business enterprises, post-colonial reparations, the battle against discrimination, educational equality, the carbon card, the gradual decommodification of the economy, guaranteed employment and an inheritance for all, the drastic reduction of monetary inequalities, and finally, an electoral and media system that cannot be controlled by money.’ He is clearly serious about wanting to bring this world order about.

There isn’t any component of his utopia he hasn’t thought through. Federal socialism, new ownership structures, quarter of a million inheritances for all, funded by a bit of borrowing of modern monetary theory, but mainly a return to ‘punitive’ taxation rates that Piketty suggests worked well in the past.

To be fair, that last point is not completely without merit.

That welfare expansion of the 20th century, catalysed by the extension of the democratic franchise, funded by progressive taxation, reduced inequality in the west, is incontrovertible. The history of spending growth of the 20th century used to be one of my stock public policy lectures.

At the core of A Brief History Of Equality is the reworking of the central premise of all Piketty’s work, indeed chapter three is essentially a precis of Capital. But the book goes a lot further. His sweep includes the exploitation of the global south by the global north, climate change, slavery, colonialism – all big-ticket factors contributing to the ‘history’ of global inequality.

There’s plenty of material for the online culture warriors.

Piketty has a few irritating literary habits. Not least the tendency to write such long sentences that one easily forgets their original point by the end of them.

He shoehorns climate change as a contributor to global inequality at the front and back ends of the book. It sits a bit awkwardly – such a big ‘thematic’, whether you agree with or not, I felt was deserving of a more thorough exposition.

For what it’s worth, I sympathise with his argument (I won’t get into it now) but I find it just too simplistic. Just Stop Oil simplistic.

My main criticism is that Piketty’s broad sweep of history, at 200 years, is a bit too short to attribute the centrality he attributes to it. Not least as his basic premise is that global socialism is just an ‘inevitable continuance’ of ‘this long march of history’ (my words not his).

Piketty is honest enough to acknowledge that the world is in a much better place now than in 1950.

Or, to put it another way, things haven’t really gotten worse in the last few decades as the propaganda machine would have you believe. Piketty’s propaganda machine as it happens.

He suggests the Conservative Revolution of the early 80s brought a stop to the convergence in western wealth and income levels that was the topic of Capital. And this was partially reversed, but only in the US. Elsewhere things have remained pretty much as they were. As it happens, this is the exact point made by the International Sustainability Institute’s paper Convenient Untruths – Exploring Global Fiscal Fallacies, published last year. So this section was galling for me to read. Conventional wisdom has it that there’s been a massive increase in global inequality in the 21st Century. There hasn’t, it’s our preoccupation with it that has, because of the relentless propaganda. With Piketty leading the charge.

That charge now has capitalism itself in its sights.

He’s very transparent about it.

In a Brief History Of Equality, Piketty takes issue with the concept of the free movement of capital as a motto of the neo-colonialists, the propaganda of the rich. A short soundbite stopping any academic argument about efficiency and growth in its tracks.

So, here’s the thing.

Piketty now openly attacks capitalism and has freedom of moving of capital in his crosshairs. This being the world’s most talked about economist, one who has defined the fiscal policy agenda over the past decade, where do we think this might lead? Just as a reminder, Guernsey’s on the other side of all this.

I regularly air my concerns for the underlying health of our finance sector in these pages. Offshore finance is in secular decline, in the main because of the success of the propaganda of the world’s most talked-about economist.

If he wins this new argument, then the last one to leave Guernsey better remember to switch off the lights.